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Global X U.S. Cash Flow Kings 100 ETF (FLOW) - free report >>
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IIVI vs. FLOW: Which Stock Is the Better Value Option?
Investors interested in stocks from the Manufacturing - Electronics sector have probably already heard of II-VI and SPX Flow (FLOW - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
II-VI has a Zacks Rank of #2 (Buy), while SPX Flow has a Zacks Rank of #5 (Strong Sell) right now. This means that IIVI's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
IIVI currently has a forward P/E ratio of 20.33, while FLOW has a forward P/E of 24.45. We also note that IIVI has a PEG ratio of 1.02. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FLOW currently has a PEG ratio of 4.52.
Another notable valuation metric for IIVI is its P/B ratio of 1.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, FLOW has a P/B of 1.45.
These metrics, and several others, help IIVI earn a Value grade of B, while FLOW has been given a Value grade of D.
IIVI has seen stronger estimate revision activity and sports more attractive valuation metrics than FLOW, so it seems like value investors will conclude that IIVI is the superior option right now.